Concerns about Facebook's negative effect on the economy - especially an economy on the verge of recession - were raised just recently when 13 Virgin Atlantic staff were sacked for criticising the airline online.

If there is so much concern about the detrimental effect of Facebook on the economy, why am I, as an economist, trying to encourage more people to use it?

Well, while any adverse effect of Facebook on productivity is detrimental to the economy, economic theory also suggests that the economy could be improved if there were more users. In other words, as long as Facebook isn't used at work too much, everyone would be better off if more people used it.

The basic idea is that each user of Facebook not only gains individual benefits from using the social networking site, but also provides (network) benefits to other people. And since people generally do not take into account the benefits to other people when deciding whether or not to join Facebook, there are fewer users than is ideal for society.

Allow me to explain.

In the language of economics, Facebook is said to exhibit network effects; it is a technology that becomes more valuable as more people use it (and the network gets larger), like mobile telephones or fax machines, for example.

To see how Facebook has network effects, consider how useful it would be if you were the only member. Probably not very useful. But if all your friends and family use Facebook, then it becomes a lot more useful because you can contact many different people through it.

I have experienced this network effect using the website. When I first joined all the way back in 2006 (yes, I was an early adopter), I didn't use it much because not many of my friends used it. It wasn't very valuable to me at the beginning because the number of people who I could contact through it was small.

But as more of my friends joined, I found myself using it more and more - there were more friends whose walls I could write on, profiles I could view and whose holiday photos I could look at. There were also more long lost friends from primary and high school I was put in contact with. So the website's value to me increased as the number of users got larger.

The network effects of Facebook have a number of consequences. One of the consequences, network externalities, is what leads to there being fewer users of Facebook than is ideal or efficient for society.

Facebook has externalities because when a new user joins the network, they gain personal benefits from joining the network as well as bringing additional benefits to existing users of the network by increasing the number of people existing users can contact. The additional benefits to existing users are not taken into account or internalised by the new users and so are called network externalities.

These network externalities lead to too few users joining Facebook because potential users do not take into account the additional benefits they bring to existing users. That is, people only join when their personal benefits of joining are greater than their personal costs of joining. (The personal costs of joining include the time it takes to register and set up a profile, but it does not cost money.)

This results in an inefficiency because there are people who do not join Facebook even though the total benefits of joining - their own personal benefits plus the additional benefits to existing users - is greater than their personal costs of joining.

Hence according to economic theory, the existence of network externalities in Facebook results in too few users joining because people do not take into account the benefits they bring to existing users of the network - in essence, people are selfish. And if more people joined, society as a whole would be better off.

I recently experienced an example of how people can be selfish by not joining Facebook, and if they joined, it would make some of our lives a lot easier.

I was attempting to organise a dinner with some former economics Honours classmates from university. The only contact I had with some of these former classmates was through Facebook. Also almost all of my friends now use Facebook, so it made sense to organise the event through Facebook.

Facebook also has some good features which make organising an event through it convenient. For example, to invite an extra person to an event, all you would need to do is to click on that person's name and click 'send invitation'. They would then know all the details of the event including who else is attending.

But because quite a number of my former classmates have not joined Facebook, I also had to spend time searching for people's emails, writing emails and calling people. This searching, emailing and calling took up a substantial amount of time.

If these people had only joined Facebook, it would have saved me a lot of time in organising this event. But of course they do not care about how much time it takes for me to organise an event - they only take into account their personal benefits from joining Facebook and not the benefits to everyone else.

The thing is, these friends are economists too, so they understand how network externalities lead to an inefficient underconsumption of network goods like Facebook. So they know if they signed up, everyone would be better off. But perhaps, they actually spend their time at work, working.

David Quach is an economic adviser with the Australian Competition and Consumer Commission (ACCC). The views expressed in this article are his own.

You have no doubt been hearing a lot about the Paris Agreement and know that it pertains to climate change, but are too embarrassed at this stage to ask for an overall explanation of what it's all about.